Recent Comments

Victory!

* Anatole Kaletsky: Associate Editor of The Times* Professor Norman Stone: Professor of International Relations and Director of the Russian Centre at Bilkent University, Ankara.* Alexei Pushkov: Anchor of the most popular Russian TV programme “Post Scriptum” which has considerable influence on Russian public perception of international events.

Speakers against the motion:

* Edward Lucas: Central and Eastern Europe correspondent for the The Economist and author of The New Cold War: How the Kremlin Menaces Both Russia and the West (2008).

Thursday, October 09, 2008

WHEN communism collapsed, the West had all the cards. The one-party state and the planned economy hadn’t worked. Welfare capitalism, free media, the rule of law and contestable elections were winners both in theory and in practice. Memories of cold-war compromises and blunders, real or imagined, were either fading or appeared forgivable.

Even better, Western economies were mostly in good shape: West Germany could afford to take on the colossal bill for rebuilding the former Soviet-occupied zone in the east. Raising capital for the European Bank for Reconstruction and Development was a doddle. Things got even better: as liquidity swirled round the world’s capital markets, investment poured into the ex-communist economies. Russia received bail-out after bail-out, most spectacularly before the financial crash in 1998. In return the West laid down conditions: convertible currency, free trade, balanced budgets, privatisation.

How different that looks now. First, the West has shredded its moral authority as the arbiter of the international order. Admittedly, taken case by case, each decision looks defensible. NATO expansion reflected the wishes of countries that even then felt menaced by Russia. Bombing Serbia was necessary to stop genocide in Kosovo. Invading Afghanistan toppled the Taliban. Attacking Iraq was, on the evidence presented at the time, arguably better than doing nothing. And so on.

But the cumulative effect is terrible, chiefly because it looks so selective. When the West worries about oil, weapons of mass destruction, or terrorism, it finds a high-sounding excuse to do what it wants. When it can’t be bothered to intervene (Darfur, Zimbabwe, Burma) or has useful but nasty allies (Saudi Arabia, Uzbekistan) it pleads realpolitik. That characterisation is unfair, but many people, particularly in Russia, find it all too convincing.

All that was bad enough. But the financial crisis adds a new and corrosive element. The West has no money to play geopolitics with, as Iceland’s meltdown and panicky approach to Russia shows. Worse, Western leaders’ management of economics is discredited at home and abroad. Jobs and savings are buffeted by the aftershocks of a collapse in a model that was supposedly what everyone in the ex-communist world was meant to follow. Who and what are we meant to believe in now?

In particular, many will be wondering whether their integration into the international economy was a good idea. Selling banks to foreign owners once looked like a panacea: stoking confidence and removing the temptation for politicians to meddle. Now it looks like a curse. You can ask your own taxpayers to bail out the nation’s savings (if they can afford it). You can even print more money if you need, stealing a little bit from everyone. When your country’s financial system is owned by foreigners, those choices narrow.

Don’t forget, though, that free markets, like open politics, have done a good job in eastern Europe, lifting millions of people out of the poverty caused by communism (the statistics don’t show this as clearly as they might, because they hugely overestimate the value of what planned economies produced). And autarkic models of development have huge flaws too. Russia may have a huge cash pile, but its record on modernisation of infrastructure and public services, let alone on corruption, is hardly an advertisement for putinomics.

The best response from the ex-communist world to the crisis now is not to turn the clock back, but to rekindle enthusiasm for making economic and politics better: cleaner, clearer and crunchier. The lazy attitude of the past few years has been to match the lowest standards in the West, rather than strive to beat the best. That will no longer do.

3 comments:

This approach, with which I totally agree, deserves to be disseminated and discussed more widely here in Poland. It seems to me that it has not only been a case of "matching the lowest standards" but also of abrogating responsibility and allowing these standards to be imposed willy-nilly. Is there any chance of your writing a Poland-directed and more specific article for the Polish press (Gazeta Wyborcza?). In the past most of your pieces have sparked some interest. Perhaps there are some economists and politicians who have not become so soured that they cannot rise to the challenge. This country is going to need to think things out for itself pretty fast anyway.

New blog!

This site is no longer active. Please go to edwardlucas.com/blog instead

Regards

Edward

Bene Merito award

Without my foreknowledge, I was last year awarded the Bene Merito medal of the Polish Foreign Ministry. Although enormously honoured by this, I have sadly decided that I cannot accept it as it might give rise to at least the appearance of a conflict of interest in my coverage of Poland.

About me

"The New Cold War", first published in February 2008, is now available in a revised and updated edition with a foreword by Norman Davies. It has been translated into more than 15 foreign languages.
I am married to Cristina Odone and have three children. Johnny (1993, Estonia) Hugo (1995, Vienna) and Isabel (2003, London)